“Because of our tax cuts, Apple is investing $350 billion in the United States. … And two days ago, ExxonMobil, in addition to many others, just announced that they are investing $50 billion in the United States. So the good news just keeps on rolling in.”
—Trump, in remarks to congressional Republicans, White Sulphur Springs, W.Va., Feb. 1, 2018
Trump has been on a good-news kick lately, claiming that several multinational corporations are bringing jobs, factories or profits back to the United States because of the tax overhaul he signed in December.
The president’s habit of taking credit for business decisions earned him Four Pinocchios in March 2017. We rounded up claims about 13 companies at the time and found little evidence that Trump’s policies spurred their investments. In fact, many of those companies had announced their moves before he took office.
But now, Trump can point to a major legislative achievement — the tax overhaul approved by Congress in December — to support his claims. Taken together, several recent statements by Trump suggest that companies have announced $400 billion in investments and are building two new auto plants in the United States because of the tax changes.
How much of that is real, and how much of it is happening because of Trump’s tax overhaul?
A Republican tax package signed by Trump on Dec. 22 slashes the corporate tax rate from 35 percent to 21 percent, among other provisions favoring multinational corporations. Whether it’s in his State of the Union address, at the World Economic Forum in Switzerland, in remarks at the White House, or at a GOP retreat in West Virginia, Trump has been celebrating the tax package as a historic coup.
Specifically, the president has linked the tax changes to recent investment announcements by four U.S. companies: Apple, ExxonMobil, Fiat Chrysler and GM. These companies’ announcements are all nuanced in different ways, and we’re going to look at each in turn.
Apple announced a five-year investment plan in January that adds up to nearly $350 billion. That includes roughly $275 billion in spending with U.S. suppliers and manufacturers, $30 billion in capital expenditures and $4 billion for a fund it set up to promote innovation among its manufacturers for product parts. Apple plans to build a new campus and hire 20,000 employees.
But the tech giant did not directly attribute any of those moves to Trump’s tax overhaul.
Apple chief executive Tim Cook told ABC News that “there are large parts of this that are a result of the tax reform, and there’s large parts of this that we would have done in any situation.”
A White House official pointed us to another set of comments Cook made on CNBC: “While some of these efforts were indeed in the works, Washington enabled most of this job-creating plan to occur by changing the tax code to allow companies to return capital to all stakeholders.”
We asked for a breakdown of how much was due to the tax changes and how much was in the pipeline regardless, but Apple did not provide one.
That leaves us with only one component of Apple’s plan specifically linked to Trump’s tax overhaul: a $38 billion payment to repatriate overseas profit. Our colleague Hayley Tsukayama reported that a payment of that size “suggests that Apple is paying taxes on the majority of the $252 billion in offshore cash that it reported holding in its last earnings release.”
We also have some glowing comments from Cook, who had been pressing for changes in the tax code for years before Trump came into the picture. In 2015, Cook told “60 Minutes” that the U.S. tax code “was made for the industrial age, not the digital age.”
“It’s backwards. It’s awful for America,” Cook said. “It should have been fixed many years ago. It’s past time to get it done.”
But it’s not clear from Apple’s announcement that it really is dialing up U.S. investment levels. Tsukayama reported that “Apple has not said how much of the money it spends on projects, such as facilities, goes to the United States; globally, Apple has spent between $12 billion and $15 billion on such projects over the past several years.”
Trump says ExxonMobil is investing $50 billion in the United States because of the tax changes. That matches up with a blog post by Exxon’s chairman and chief executive, Darren Woods, who wrote Jan. 29 that “we will be investing billions of dollars to increase oil production in the Permian Basin in West Texas and New Mexico, expand existing operations, improve infrastructure and build new manufacturing sites.” Woods said thousands of jobs would be generated.
But here’s the caveat: Woods said the investment was only partly due to the tax changes (again, there’s no breakdown of how much was going to be invested without the tax package and how much because of it). Moreover, a company spokesman later clarified that the new investment over five years totaled $35 billion — not $50 billion — because $15 billion in projects already had been announced.
“Several companies have announced plans to invest here at home, partly as a result of tax reform, which among other things reduced one of the highest corporate tax rates in the developed world,” Woods wrote. “These positive developments will mean more jobs and economic expansion across the United States in a myriad of industries.”
This one is tricky because there are a couple of Fiat Chrysler announcements and several versions of Trump’s claim in the mix — all of this involving one plant in Michigan. Basically, the president has claimed credit for Chrysler’s biggest moves since shortly after his inauguration.
It started with Trump bragging about Chrysler’s decision to invest $1 billion in January 2017. But the automaker’s decision to invest $1 billion in Michigan and Ohio plants at that time had nothing to do with Trump. Sergio Marchionne, the Fiat Chrysler chief executive, said that plan had been in motion for some time and credited talks with the United Auto Workers in 2015.
Fiat Chrysler made a new announcement Jan. 11 — another $1 billion investment in the same Michigan plant. Except, this time, it said the move was “made possible in part by the passage of U.S. tax reform legislation late last year.”
Trump said “Chrysler is moving a major plant from Mexico to Michigan” in his State of the Union address Jan. 31 and has since repeated that claim.
“In fact, the president was correct,” said Jodi Tinson, a Fiat Chrysler spokeswoman. “We are moving production from a plant in Mexico to a plant in Michigan.”
But Tinson then added: “We’re moving production of a specific product — the Ram Heavy Duty — from Mexico to Michigan. The Mexican plant will remain open to produce future commercial vehicles for global distribution.”
At a White House meeting to discuss international trade Feb. 13, Trump said four times that GM was closing a plant in South Korea and moving it to Detroit. “I just think that General Motors moving back into Detroit is just a fantastic thing,” he said.
But GM announced only that it was closing a plant in Gunsan, South Korea. There was no word that it would be moving those operations to Detroit or anywhere else in the United States. In fact, GM said it expects to take charges of $850 million from closing the plant.
“The Gunsan facility has been increasingly underutilized, running at about 20 percent of capacity over the past three years, making continued operations unsustainable,” according to a GM news release on Feb. 12.
The White House did not respond to a request for comment on this issue. Did we miss anything? “Our announcement was strictly about the Gunsan plant,” said GM spokesman David Albritton.
The Pinocchio Test
Like a proud parent, Trump is effusive talking about the tax overhaul he signed in December. And like a proud parent, he tends to aggrandize the details.
Apple, ExxonMobil and Fiat Chrysler to varying degrees say Trump’s tax package helped facilitate new U.S. investments worth a combined $385 billion. But they all agree the tax package was but one of several factors. Moreover, it’s not known how much of this money would have been invested anyway, regardless of the tax changes. These claims from Trump are all worth between One and Two Pinocchios.
On GM, Trump is not on solid ground. He said the automaker would be shuttering a plant in South Korea and moving it to Detroit, but the company made no such announcement. It said only that it was closing the South Korean facility. This claim by itself is worth Four Pinocchios.
There’s no debate that the tax changes were welcomed by major U.S. corporations and that several of them are responding with domestic investments. But, in sum, Trump earns Two Pinocchios for overstatements that confuse the situation.
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